NL-Tilburg, March 29th 2020
Shall we begin with the good news ? In the 2nd half of March the prices of certain low grades moved up. Not that much but in percentage quickly 30 to 50% on today’s low pricing. And already the last days of this week most buyers, with the South European ahead, made it clear that they are quite willing to pay more ion April. It is the result of less generation and higher transport costs amongst others but also filling order books of some paper and board mills, mainly in the food sector, that lead to more buying. On a market where volumes are being reduced it comes automatically to higher pricing. How much we will go up and for which grades is not clear yet but it could be easily between € 10 and € 20 per tonne for most grades. And this not taking in consideration already increased prices in Spain and Italy. Early next week there surely will be more clarity.
It is strange in fact, these price increases. Generation is much lower indeed, but less paper is needed as well, isn’t it ? In fact we now should have the generation of the pre-corona period in a paper and board market that is shrinking quickly. So, oversupply you would think. In a ‘normal’ recession situation that would be so, but this is not a normal one. Our companies (and those in waste management) might be crucial companies and indispensable, but many people are ill or have corona symptons themselves or their siblings which oblige them to stay at home. Generation is under threat due to lack of people or the necessary caution to protect the ‘key-workers’ while collecting. The Recycling Association in England called already on Defra to push councils to continue household collections – the generation of trade waste has already collapsed completely. Maybe the waste management companies with their MRF’s initiated this call on Defra, but Ellgia, a waste management company in the East of England informed its customers that they would no do any co-mingled collections anymore and were only willing to collect paper and board separately. All the rest should go in the general waste and being landfilled. They saw the collection of co-mingled too risky for their workers. That says enough about the quality of these kind of collections. With some luck the idea of Ellgia will be followed by others and will the U.K. go all of a sudden from commingled to separately collected recovered paper. Every cloud has a silver lining . . .
The actual feeling of shortage might fade partly by the reduction or perhaps even total stop on exports to Asia. This week prices of recovered paper (occ/kls) as well as finished paper in China went down sharply. A lot available, no demand. And imported recovered paper is mainly bought in the USA only at this very moment. The barriers to export are also high for other reasons. First there is the very limited availability of containers and the high shipping rates. Added to that are in the meantime the lockdowns in countries and ports of destination. For example in India there is no staff in the ports anymore to get containers to the mills and couriers have indicated not even to be able to guarantee anymore the in time arrival of the documents. Further more shipping lines are so compassionate indicating being aware of the problems with delivery of goods in far distant ports but that possible costs occurring when containers are not
emptied really have to be borne by the shipper only. In normal circumstances that is the rule and can be expected but if this is juridical sound for containers that have been shipped before the outbreak of the virus, remains to be seen. But whoever is now loading containers for export must have suicidal inclinations.It is all very unclear and things differ often or change in a single day. Last week Hugh Pym of the BBC spoke of the virus surviving only one hour on card board, this week another specialist spoke about 1 day. And only a few days ago for example orders for our mill in Raon L’etape increased strongly , as hoarding is also heard of by our customers, but with the closure of fast food and other restaurants which are the eventual end users of our produce, orders have completely dried up and as it looks now we will have to close the mill down early April due to lack of orders. So recovered paper won’t be needed anymore either until further notice.
Imports into China of raw material for the paper industry
Raw material 2019 in tonnes 2018 in tonnes difference
recovered paper 10.356.508 17.171.076 min 6.814.568
recycled pulp 948.514 325.978 plus 622.536
virgin pulp 27.195.870 25.352.159 plus 1.843.711
Totals 38.500.892 42.849.213 min 4.348.321
In the year 2017 China imported 20.968.400 tonne sof recovered paper oud paper.
Total import licenses recovered paper issued in China
2018 : 18.251.651 tonnes
2019 : 10.796.727 tonnes
2020 so far : 3.187.410 tonnes